The United States Senate Judiciary Committee, with bipartisan support, has advanced the Protecting Older Americans Act Bill. The bill, which was introduced by Kirsten Gillibrand, D-N.Y., and Lindsey Graham, R-S.C., heads to the full United States Senate. If enacted, this legislation would invalidate mandatory arbitration clauses in cases where an older employee asserts age discrimination claims against employers. If enacted, the proposed legislation covers both individual and class action age discrimination claims. The language of the proposed bill would cover both state and federal age discrimination claims. Older employees in New Jersey, New York, and Pennsylvania enjoy protections under both federal and state laws.

It is unclear at this point whether or not the bill will eventually become law. Several Senators have expressed reservations about the bill, calling it a “slippery slope” towards the end of mandatory arbitration clauses in other federal and state anti-discrimination laws. Assuming the Senate passes the bill, the United States House of Representatives would also need to approve it before it goes to the President who may veto it.

Employers often prefer to adjudicate these disputes in arbitration because arbitrators may be less likely than a jury to rule in favor of an employee asserting these claims. Likewise, employers often prefer mandatory arbitration clauses because arbitrators generally give employees smaller verdicts than juries. Although the American Arbitration Act requires the employer to bear the costs associated with the arbitrators, employers generally prefer arbitration in these matters because there is less discovery, more privacy and confidentiality, and less time for adjudication than in traditional court.

Stark & Stark will continue to monitor this important bill.

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The United States Equal Employment Opportunity Commission (“EEOC”) is cracking down on the discriminatory treatment of transgender employees. Recently, a New York-based pizzeria agreed to pay $25,000 and agreed to other terms to settle a case brought by the EEOC that alleged that the owner of the restaurant and several staff members told their transgender co-worker “wasn’t a real man,” and asked the employee about his transition and genitalia.

Unfortunately, transgender employees experience high rates of employment discrimination, prompting the EEOC to take action. A recent study found that 48.8% of transgender employees experienced discrimination based on their LGBTQ+ status. The same study found that 43.9% reported not being hired because of their LGBTQ+ status. It also found that a staggering 43.8% of transgender employees reported verbal harassment during the course of their careers.

Employers must take affirmative steps to protect their LGBTQ+ employees and shield themselves from civil liability. Those steps should include:

1. Creating and implementing policies and procedures prohibiting discrimination based on sexual orientation,
2. Including regular (at least yearly) training, which includes all forms of unlawful discrimination, including but not limited to LGBTQ+ discrimination,
3. Fostering a tolerant and welcoming culture through educational and other events and programs,
4. Communicating a strong commitment to LGBTQ+ inclusion,
5. Providing employees a road map to reporting allegedly discriminatory conduct, and
6. Taking allegations of discrimination seriously and taking effective, remedial steps to ensure that it’s dealt with and does not occur again.

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In a previous blog post, I wrote about the elements of a negligence hiring claim and made recommendations how to avoid liability for your business. A negligence in supervision/retention claim has certain similarities to the negligence hiring cause of action. Negligence hiring, supervision, training, and retention claims are not based on vicarious liability, like a respondeat superior claim. Instead, each of those claims are based upon the actual fault of the employer. G.A.-H v. KGG, 238, N.J. 401, 415 (2019).

To be found liable for negligent supervision, training, or retention, the Plaintiff must establish that: (1) an employer knew or had reason to know that the failure to supervise or train an employee in a certain way would create a risk of harm, and (2) that risk of harm materializes and caused the Plaintiff’s damages. DiCosala v. Kay, 91 N.J. 159, 173 (1982). In the employment context, I have seen these claims brought against employers based on the following scenarios:

1. The employer had reason to know that an employee had engaged in unlawful workplace discrimination in the past but decided to retain them; and
2. The employer failed to take affirmative steps such as,
   • Developing and implementing anti-harassment training
   • developing and implementing written policies and procedures that set the expectation that employment discrimination will not be tolerated in the workplace and provide employees with a roadmap for reporting allegedly unlawful behavior.

First, employers can limit their exposure to this claim by not retaining an employee they know or have reason to know has violated employment discrimination laws in the past. If an employee alleges workplace discrimination, the employer has a legal obligation to take steps to ensure that the alleged discriminatory conduct stops. I recommend if one of your employees makes an allegation of sexual harassment that your company retain the services of a neutral, unbiased, trained investigator to conduct a thorough investigation of the alleged conduct. The investigator will make certain recommendations after their investigation. I strongly encourage your business to follow those recommendations. For example, if the investigator recommends the termination of the alleged perpetrator’s employment, your company should do the same. If the company does not follow that recommendation and sometime later, the employee allegedly sexually harasses another employee, the decision not to follow the recommendation of the investigator could result in your company being sued for negligence in supervision, retention, or training.

Second, employers can limit their exposure to this claim or an indirect employment discrimination lawsuit by providing all employees with yearly training and implementing robust policies and procedures to ensure the same. I recommend that training begin at the inception of employment and continue at least once per year. Moreover, I recommend that your company draft and circulate an employee handbook that provides simple, straightforward information about your company’s discrimination rules and policies. Those polices should remind employees and managers about their rights, duties, and responsibilities to prevent workplace discrimination. Furthermore, they should educate employees on what to do if they either witness or are subjected to workplace discrimination.

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Effective March 11, 2024, the new independent contractor rule from the United States Department of Labor (DOL) takes effect. This rule change restores an earlier standard that required employers to weigh several factors in determining whether or not they may treat an individual as an employee versus an independent contractor.

The analysis of whether or not an individual may be treated as an independent contractor as opposed to an employee can have many legal implications, including but not limited to subjecting your company to a mischaracterization lawsuit under the Fair Labor Standards Act (“FLSA”).

The new test will consider the following factors in determining whether an individual may be treated as an independent contractor as opposed to an employee:

1. The degree to which the employer controls how the work is performed,
2. The worker’s opportunity to profit or lose money based upon the work performed,
3. The amount of skill and initiative required for the work,
4. The degree of performance of the working relationship,
5. The worker’s investment in equipment or materials required to perform the work,
6. The extent to which the service rendered is integral to the employer’s business.

The consideration of whether your company may treat an individual as an independent contractor versus an employer does not end with those six factors. That is because there are many state and local employment laws that may be violated if your company mischaracterizes an employee as an independent contractor. For example, New Jersey applies the “ABC Test” in determining if an individual may be characterized as an independent contractor versus an employee in determining if that individual should be covered by unemployment protections or must be covered by your company’s workers’ compensation policy.

It is also strongly recommended that companies have class-action waivers in all arbitration agreements they use with their independent contractors.

The employment law team at Stark & Stark can help your company not run afoul of these significant and important changes in the law. Failure to do so could expose your company to lawsuits and risk.

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Employers’ employees often encounter other members of the public. Those interactions can lead to litigation. For example, as addressed in one of my prior blog posts, an employee could be accused of sexually harassing a customer, vendor, or other third party. As discussed in that prior blog post, that could result in potential liability against the employer based upon New Jersey’s Law Against Discrimination.

Likewise, an employer who hires an employee with a history of drunk driving offenses could be sued for negligence in hiring if that employee injures a third party while operating a company vehicle intoxicated during company time. In other words, “negligence in hiring” claims are not limited to discrimination claims. The “negligence in hiring” claim may be asserted in addition to a respondeat superior claim (a legal theory in which an employer is responsible for the negligence or wrongdoing of its employees).

Because employers are responsible for “exercising a duty of reasonable care in the selection or retention of its employee,” under certain circumstances, an employer can be sued for negligence associated with the hiring of the employee. See, Di Cosala v. Kay, 91 N.J. 159, 170-171 (1982). The negligence in hiring claim has two elements that must be proven by the Plaintiff by a preponderance of the evidence:

1. That the employer “knew or had reason to know of the particular unfitness, incompetence, or dangerous attributes of the employee and could reasonably have foreseen that such qualities create a risk of harm to other persons; and
2. That, thought the negligence of the employer in hiring the employee, the latter’s incompetence, unfitness, or dangerous characteristics proximately caused the injury.”

Di Cosala v. Kay, 91 N.J. at 173.

Employers should take the following steps to try to limit the liability of this claim. First, employers should conduct reasonable due diligence before hiring an employee. If prior employers will speak with you, I recommend asking about potential prior problems with the prospective employee. Conduct online research to see if there are lawsuits or other claims against the prospective employee. Run background checks to see if the prospective employee has any licensing or other issues. Ask the prospective employee to provide a driver’s abstract and for information identifying potential “red flags.”

In doing so, please ensure your company files your particular state laws regarding questions and background information you may obtain/ask about. For example, the New Jersey Opportunity to Compete Act, N.J.S.A. 34:6B-11, et. seq., prohibits, amongst other things, a job applicant to fill out a job application or other screening form which asks about their criminal record.

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Employment Plaintiff attorneys often include an “aiding and abetting” claim against the “deep pocket” employer when they sue for employment discrimination under the New Jersey Law Against Discrimination.

This blog will focus on two issues: the legal elements of an aiding and abetting claim and what steps employers should take to protect themselves from this claim.

A Plaintiff proves aiding and abetting against an employer under the New Jersey Law Against Discrimination by showing the following elements:

1. The party whom the defendant aids must perform a wrongful act that causes injury,
2. The defendant must be generally aware of his or her role as part of the overall illegal or tortious activity at the time he or she provides the assistance, and
3. The defendant must knowingly and substantially assist the principal violation.

Tarr v. Ciasulli, 181 N.J. 70, 84 (2004).

A claim for aiding and abetting “requires active and purposeful conduct.” Cicchetti v. Morris Cnty Sheriff’s Off., 194 N.J. 563, 594 (2008). Aiding and abetting focuses on “whether a defendant knowingly gave substantial assistance to someone engaged in wrongful conduct, not on whether the defendant agreed to join the wrongful conduct.” Podias v. Mairs, 394 N.J. Super. 338, 353 (App. Div. 2007). For example, if an employer knew that one of its employees was sexually harassing another employee and did nothing to stop it, which allowed the sexual harasser to continue his/her unlawful conduct, the employer could be sued for aiding and abetting and other theories under the New Jersey Law Against Discrimination.

With that understanding of the elements of the claim, it is crucial for employers to take affirmative steps to stop known violations of the New Jersey Law Against Discrimination. They include: (1) effective training to convey that workplace discrimination will not be tolerated by the employer; (2) providing employees who believe they have been subjected to discriminatory conduct to report such conduct and providing multiple avenues to report the same; (3) requiring upper-level employees (shareholders, partners, supervisors, members) to report workplace discrimination; and (4) immediately, and effectively dealing with allegations of workplace discrimination.

If one of your employees reports workplace discrimination, it is extremely important that you take the allegations seriously. It is recommended that your company engage an outside, independent law firm to conduct a comprehensive and thorough investigation into the allegations. If the allegations are deemed to be true, your company must take effective remedial steps to stop the conduct from happening again. Often, that includes the termination of the employee who was deemed to have violated the New Jersey Law Against Discrimination. It is also extremely important that your company take affirmative steps to ensure that the complainant or any person who provides information in furtherance of the discrimination claim is not subjected to any form of retaliation. Retaliation is a separate cause of action under the New Jersey Law Against Discrimination which can also expose your company to liability.

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The New Jersey Appellate Division issued a decision which sheds light on the issue of whether an employee’s sexual harassment of a third-party (non-employee) could subject the employer to liability under the New Jersey Law Against Discrimination. This was the first instance where a New Jersey Court considered the “issue of employer liability in the context of an employee’s sexual harassment of a third-party in a housing or real property transaction” under the New Jersey Law Against Discrimination.

The New Jersey Law Against Discrimination prohibits sexual harassment in housing and real estate transactions making it unlawful, “for any person, including but not limited to, any owner, lessee, sublease, assigning or managing agent of, or other person having the right of ownership or possession of or the right the sell, rent, lease, assign, or sublease any property or part or portion thereof, or any agent or employee of any of these… to refuse to sell, rent, lease, assign, or sublease or otherwise to deny to or withhold from any person or group of persons any property or part of portion thereof because of… sex….” N.J.SA. 10:5-12(g).

In Traore v. Fairview Homes Pres., L.P., the Appellate Division considered whether or not an employee who worked for a management company could subject his employer (the management company) and its client (a landlord) to liability based on an allegation that “he touched and tried to touch her and pressure her to meet him at his hotel room to have sex with him in exchange for an apartment lease and housing assistance for her family.” The trial court granted a pre-answer motion to dismiss claims asserted against the employer and the landlord.

The Appellate Court upheld the decision as to the landlord, holding that the landlord never employed the alleged sexual harasser. Under the New Jersey Law Against Discrimination, liability cannot be imposed on an entity for the discriminatory conduct of the employee of an independent contractor. See, Majestic Realty Assocs v. Toti Contracting Co., 30 N.J. 425, 430-31 (1959).

The Appellate Division reversed the dismissal of the claims against the employer of the alleged sexual harasser. The Court held that in the case of a master-server relationship, the finder of fact must engage in a “detailed fact specific analysis” answering the following questions:

1. Did the employer delegate the authority to the supervisor to control the situation of which the plaintiff complains?
2. Dd the supervisor exercise that authority?
3. Did the exercise of authority result in a violation of the New Jersey Law Against Discrimination?
4. Did the authority delegated by the employer to the supervisor aid the supervisor in injuring the plaintiff?

Each of the above questions must be answered in the affirmative to impose vicarious liability against the employer.

The Court also addressed the employer’s argument that it should be insulted from liability because it has anti-harassment training and policies in place. The Court held that “although an employer’s anti-harassment policy is a critical factor in determining negligence and recklessness claims…it is an affirmative defense to liability and therefore irrelevant to determining whether plaintiff stated a claim under the LAD.” The Court also pointed out that the training did not include sexual harassment against non-employees/co-workers.

I strongly recommend that employers include workplace discrimination training and employee manuals to include policies and procedures that include discrimination against customers, perspective customers, vendors and other third parties. I also strongly recommend that all employers require that their employees engage in work-place harassment at the inception of their employment and at least once a year. Doing so, could limit suits and potential liability if one is filed.

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Employers have a duty to investigate and take appropriate remedial action if an employee complains that another employee texted inappropriate pictures or messages, even if those text messages were sent after regular work hours.

Both federal and state anti-discrimination laws define sexual harassment as unwelcome sexual advances, requests for sexual favors, or other verbal or physical conduct of a sexual nature which unreasonably interferes with an individual’s work performance or creates an intimidating, hostile, or offensive working environment. Even if the alleged harassing conduct took place after hours or outside the workplace, it may constitute the grounds for a sexual harassment claim against the employer if the conduct was severe or persuasive and was reasonably known by the employer or involved a supervisor, owner, or someone who’s deemed to be within “upper management.”

Employers must establish policies and procedures to potentially limit their liability if one of its employees sends an inappropriate text message. The first step is education. Each year, employers should provide training to all employees. That training should include:

• an explanation of the anti-discrimination laws;
• examples of conduct which could violate the company’s anti-discrimination policies and procedures;
• that all employees, including witnesses, supervisors, and the alleged victims of discrimination must report alleged violations;
• provide instructions on how to report alleged discriminatory activities, with multiple options to encourage reporting;
• an explanation of the company’s anti-retaliation policies protecting anyone who brings an issue to the company’s attention and protects all witnesses who provide information in furtherance of the same; and
• an explanation of what will and might occur if the company is made aware of any alleged discrimination in violation of its policies.

In addition, should an employee bring to management’s attention any alleged discrimination the company has a duty to investigate the claims, take affirmative remedial steps to address it (including potential termination), and protect any witnesses or complainants from retaliation. Hence, if an employee complains that they received inappropriate text messages from a co-worker or supervisor, whether during or after business hours, the employer must conduct an investigation and take steps to address the situation. Failure to do so, could expose the employer to monetary and reputational damages.

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Employers must take notice that the United State Equal Opportunity Commission (EEOC) is cracking down on companies that discriminate against workers because they have a mental health condition. Mental health conditions, such as major depressive disorder, bipolar disorder, and schizophrenia, substantially limit brain function. The EEOC determined these disorders constitute disabilities under the American with Disabilities Act (ADA).

The EEOC has significantly increased charges against employers for alleged ADA violations premised upon mental health issues.

In September, the EEOC released its Strategic Enforcement Plan (SEP). A review of the SEP reveals that the EEOC will focus on harassment, retaliation, job segregation, labor trafficking, discriminatory pay, disparate working conditions, and other policies and practices that impact particularly vulnerable workers and persons from underserved communities, including workers with mental health related disabilities.

Hence, employers must be extremely careful when dealing with employees or prospective employees who suffer from mental health conditions.

Under the ADA and other nondiscrimination laws, employers must provide “reasonable accommodations” to qualified employees with disabilities. These accommodations are adjustments to the workplace that allow these employees to perform their job duties. These accommodations are usually not costly and can be beneficial in allowing employees to return to work, avoiding productivity losses, and promoting the recruitment and retention of qualified employees.

However, not all employees with mental health conditions require accommodations to perform their job duties. For those who do, accommodations should be individualized and developed with the input of the employee. Below is a list of examples of accommodations that have helped employees with mental health conditions to better perform their job duties. These are not all possible accommodations but provide a starting point to help employers promote an inclusive and supportive work environment. These include:

• Flexible workplace arrangements
• Scheduling adjustments
• Sick leave or flexible use of vacation time
• Individualized breaks
• Modification of non-essential job duties
• Additional training or support
• Positive reinforcement and flexible supervision
• Accommodations to the work environment, equipment, and technology
• Regular meetings between employees and supervisors to discuss workplace issues.

It is important for all employees to be aware of their rights and provide relevant training to co-workers and supervisors. Effective implementation of these accommodations will help create a more inclusive work environment and benefit both employees and employers.

For more examples of reasonable accommodations, visit the DOL website.

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